Months of advocacy finally paid off for the City of Guelph and other municipalities in Ontario on Wednesday with the announcement of the first phase of emergency operating funds. Just in time for Guelph city council’s monthly COVID-19 response meeting, Mayor Cam Guthrie shared the news that Guelph’s share of $1.6 billion in funding under the Safe Start Agreement is $12 million.
“This funding is absolutely critical for Guelph to cover costs associated with COVID-19. This is certainly welcome news as we prepare next year’s budget. We’re still being careful to manage costs and prepare for the possibility of a second wave of the virus,” said Chief Administrative Officer Scott Stewart in a media statement after the meeting.
This first phase of funding comes in two parts. The City of Guelph will receive $6.9 million for emergency operating funds, and another $5.1 million specifically for transit. A deal with the Federal and Provincial governments last month secured $4 billion in “urgent, one-time assistance” for Ontario’s 444 municipalities, with those cities and towns getting a total of $695 million in assistance on Wednesday, plus another $660 million for municipal transit systems, and $212 million for the Social Services Relief Fund to help people find shelter.
“This first round of funding will address the most urgent needs of our communities, ensuring critical services like transit and shelters are there when people need them most,” said Premier Doug Ford in a statement.
The news came on the same day that council heard that Guelph is struggling with over $24 million in costs from the pandemic; nearly $21 million in lost revenues and an additional $3.6 million spending on things like cleaning supplies, personal protective equipment and other safety measures needed to re-open City facilities. Because of mitigation efforts like the furlough of over 800 City employees and a pause on discretionary spending, the City has saved about $14 million, which currently puts the year-end deficit at around $10 million.
At Wednesday’s meeting, Councillor Dan Gibson asked Stewart if the $12 million in emergency funds from upper levels of government will effectively wiped out the City’s potential year-end negative variance, and Stewart told Gibson that he “nailed it.”
Still, there are some open ended questions concerning the City’s fiscal picture, especially the news last week that the University of Guelph students’ associations were not going to be collecting fees for the universal bus pass in either the fall or winter semesters.
Without those fees, there’s a $13.5 million hole in transits revenues though the City has partnered with the University to offer a special discounted pass for students priced at $272 per semester. No one knows yet how much pick up there will be for this new pass with less than 1,000 students living on campus, and less than 50 undergraduate courses being offered in person.
A full report from the financial department on the second quarter variances is expected to be received by council in September.
In addition to the confirmation about the emergency funds, Guthrie also re-started from the meeting that Guelph is still technically under a state of the emergency. “COVID-19 isn’t over. It isn’t solved. We are learning to live with this virus as we get back to the business of local government, and we’re preparing in case our circumstances change in the fall,” the mayor said.
The Bigger Picture
Also on Wednesday, the Government of Ontario also released their first-quarter financials for the 2020-21 fiscal year, and they’ve pegged the amount of money that the Province has spent on responding to COVID-19 at $30 billion, which is an increase from the $17 billion that was first announced in March.
“Dealing with COVID-19 wasn’t a choice for any of us, but how we responded was,” said Minister of Finance Rod Phillips in a media statement. “From the very beginning, we chose to do whatever was necessary to protect the people of Ontario from this pandemic and support them as they deal with the unprecedented impact on their lives.”
The new money includes $4.4 billion to help healthcare and hospitals respond to COVID-19 and build capacity, and another $7.3 billion to support workers and employers, including pandemic pay for frontline workers. The government is now projecting a deficit of $38.5 billion for the 2020-21 fiscal year, and that Ontario’s gross domestic product (GDP) will decrease by 6.6 per cent in 2020.
Guelph’s Member of Provincial Parliament Mike Schreiner appreciates the fiscal concerns of the government, but he also has some concerns of his own.
“There will be an understandable focus on the $38 billion deficit. But Ontario cannot afford to go back to the slash and burn budget cuts that the Ford government has always offered as a solution to our fiscal issues,” Schreiner said. “Smart, sustainable investments in a safe reopening is the best way to generate the economic recovery needed to address our fiscal, social and environmental deficits.”
Schreiner also has concerns about the gaps in spending in today’s announcement, and whether or not the numbers that the government presented reflect actual new spending.
“I’m worried that the reported $30 billion in pandemic spending is not actually the spending we need,” Schreiner added. “We learned in the FAO report from May that 20 per cent of the Premier’s action plan isn’t even related to COVID-19, including a large portion of healthcare spending that simply maintained pre-COVID service levels.”
A report in May from the Financial Accountability Office of Ontario said that the $17 billion in new spending announced by the Government of Ontario was actually only $13.5 billion of new spending because it took into account previously announced spending increases prior to the start of the pandemic.
“There are two main reasons for the $3.5 billion difference: the Province included new spending in the health sector and for electricity price mitigation programs that is not related to the COVID-19 outbreak response, and the Action Plan’s revenue measures will provide less cash flow support due to the deterioration of the 2020-21 economic outlook since the time of the March 2020 Update,” the report said.